DZY (a pseudonym) v Trustees of the Christian Brothers
[2025] HCATrans 9
[2025] HCATrans 009
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Melbourne No M81 of 2024
B e t w e e n -
DZY (A PSEUDONYM)
Appellant
and
TRUSTEES OF THE CHRISTIAN BROTHERS
Respondent
GAGELER CJ
GORDON J
EDELMAN J
STEWARD J
GLEESON J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON THURSDAY, 13 FEBRUARY 2025, AT 9.59 AM
Copyright in the High Court of Australia
MR G.J. BOAS: May it please the Court, I appear with MR J.P. O’CONNOR and MR E.H.R. KELLY for the appellant. (instructed by Judy Courtin Legal)
MR S.D. HAY, KC: If the Court pleases, I appear with MR J.A.G McCOMISH and MR C.T. MORSHEAD for the respondent. (instructed by Carroll & O’Dea Lawyers)
GAGELER CJ: Thank you, Mr Hay. Yes, Mr Boas.
MR BOAS: Thank you, your Honour. May it please the Court, this appeal concerns the proper construction of section 27QE of the Limitation of Actions Act (Vic).
GAGELER CJ: It might be more the application, is it not?
MR BOAS: Sorry, your Honour?
GAGELER CJ: More the application; the proper application.
MR BOAS: Indeed. And I was about to say, the application of that provision to the facts of this particular case. Clearly, the provision provides for the setting aside of previous settlement agreements in circumstances where it is just and reasonable to do so, and relevantly to this matter, of course, it can do so wholly or in part.
Can I commence by broadly stating our contention with respect to ground 1 in the appeal in this way. Their Honours Justice Beach and Justice Macaulay in the Court of Appeal elevated, we say, what would be clearly two relevant considerations in the section 27QE(1) analysis, being whether the Ellis defence or limitation defence had a material impact upon a claimant’s decision to settle into a requirement that one of them be present to establish that it is just and reasonable to set aside a previous agreement.
GORDON J: You say that they raised it as a precondition to the application of the section?
MR BOAS: We say it reaches that height, your Honour, yes.
GORDON J: Thank you.
STEWARD J: You would not have a problem if it was just a guideline, though?
MR BOAS: In the manner expressed, we would have a problem with it, yes.
STEWARD J: As a guideline?
MR BOAS: We do not have a problem with the proposition that an intermediate appellate court can set guidance on a provision of this nature, of course. It is the nature of the guidance that, if it was that, the court was setting.
STEWARD J: So, even as guidance, it is an error of law?
MR BOAS: Yes, we say.
STEWARD J: I see, thank you.
MR BOAS: Can I make good the proposition I have put by reference to some of the key paragraphs in the Court of Appeal’s judgment. If I could take the Court, please, to core appeal book at page 74. Their Honours ground their construction of the provision on the definition of section 27OA of the Act of a “previously settled course of action” being an agreement entered into prior to the abolition of one of the two legislative changes: in 2018, with respect to the Ellis defence; in 2015, before it, with respect to the limitation defence. That fact leads ‑ ‑ ‑
GAGELER CJ: Could you give the paragraph reference, please?
MR BOAS: Of the court?
GAGELER CJ: I am working from a different print of the judgment.
MR BOAS: I am sorry, your Honour, I am going to paragraph 109, I do apologise.
GAGELER CJ: Thank you.
MR BOAS: That observation by the court leads to the final sentence of paragraph 109, where the court says:
In our view, that observation reinforces the centrality of the actual influence of one or both of those two barriers in the consideration of whether it is just and reasonable to set aside a settlement agreement.
Then, the final sentence of paragraph 110, their Honours say that:
If no finding was made that either legal barrier had such an impact –
that being the material impact on the claimant’s decision to settle:
it is doubtful that any cogent ground would exist to conclude it was just and reasonable to set the settlement aside.
Their Honours then, in something of a – I will call it a crescendo, in paragraph 113 on this point, lead into to that, referring in paragraph 112 to a series of factors that were enumerated by the Minister in his second reading speech as factors that might be relevant to such a determination, but referred to them as “additional factors”, and say, in paragraph 113:
As we would put it, however, consideration of the actual influence of the two legal obstacles is central to the determination of whether it is just and reasonable to set aside a settlement.
And then refer to:
the importance to the integrity of the adversarial legal system –
or the finality of judgments, and say that:
apart from the influence of –
the two legal:
obstacles, other factors should be seen as supportive rather than leading factors in determining whether it is just and reasonable to set aside –
GORDON J: In that analysis, in paragraph 111, part of the support for that proposition appears to be the mischief that they identified. Do you take issue with paragraph 111?
MR BOAS: Only in this respect, your Honour. It is certainly part of the mischief of the legislation to enable claimants in this particular class to bring claims where they have settled on previous causes of action barred by one of the two legal obstacles. It really goes to the importance of those facts, and the timing of those facts – which we do not resile from, and we certainly concede are significant. What we will say is that they are significant with respect to the availability of the remedy but not to the actual remedy itself.
GORDON J: Thank you.
MR BOAS: Thank you, your Honour. Your Honours, the specific issue was addressed by Justice Lyons in a separate judgment, and we will say, with respect, that his Honour correctly addresses both the words and the context and purpose of the statute. Can I refer your Honours, please, to between paragraphs 115 and 116 of his Honour’s judgment, at core appeal book page 83, or commencing there. Briefly, at 155, his Honour says that:
I do not consider it necessary to conclude that the exercise of the court’s power under s 27QE is fettered –
in the manner that their Honours – the other two judges do. If I can refer, over the page, to paragraph 159, continuing with the consideration of the text of the provision, his Honour says that, in drafting the provision:
Parliament did not limit the exercise of the court’s power (or access to the s 27QE remedy) to circumstances where the claimant’s decision to enter the agreement had been materially impacted by one or both of the previous legal barriers. Rather, the Parliament expressly provided that the exercise of the power to set aside a settled agreement was to be exercised if the court is satisfied it is ‘just and reasonable to do so’. Those words are of very wide import, and I am reluctant to limit their operation.
And does so by reference to this Court’s judgment in the Owners of the Ship “Shin Kobe Maru” v Empire Shipping Co Inc, in the oft‑cited passage at page 421 of that judgment, concerning it being:
inappropriate to read provisions . . . granting powers to a court by making implications or imposing limitations which are not found in the express words.
His Honour reaches the conclusion and then moves on to the reinforcement of the breadth of the statutory text by reference to the extrinsic materials. He does so at 160 and 161 of his judgment. In the joint book of authorities are extensive passages from, particularly, the second reading speech.
If I can refer the Court, just for convenience, to the passages extracted by Justice Lyons. These, we say, encapsulate appropriately the purpose. If I can refer to paragraph 160 and a reference to the explanatory memorandum to the 2019 Bill, his Honour sets out this – this is from the explanatory memorandum:
It is in the court’s discretion to determine what is just and reasonable according to the circumstances of each case, allowing the court to –
and his Honour bolds this part:
apply broad principles and take account of any relevant factors.
Skipping down to 161 and passages from the second reading speech:
In determining what is just and reasonable a court can take into account a number of considerations, informed by the Royal Commission –
If I can skip down to the next paragraph, the first sentence bolded by his Honour:
It is not necessary that the existence of the limitation period be the predominant reason as to why the agreement was entered into.
Then there are reference to any number of factors, non‑exhaustive, that are also, of course, referred to by their Honours Justice Beach and Justice Macaulay at paragraph 112 but put as “additional factors” in their judgment.
We say that – well, if I can first address the fact this is dealing with the limitation defence because, of course, this is the 2019 Bill; the same argument would apply to the Ellis defence and the amendment that was made a year later with respect to the availability of the section 27QE remedy with respect to that defence.
His Honour addresses the important point which was raised by your Honour Justice Steward, I think, earlier, which is the timing of the legislation – or it might have been Justice Gordon, I am sorry. Of course, that is relevant and we accept that it is relevant, but as Justice Lyons puts it, those facts are central to the availability of the remedy, not to their content, and our position is that nothing in the language of the provision or, indeed, in its context and purpose says or otherwise requires that entry into a previous settlement be influenced by one of the two specific legal obstacles.
STEWARD J: Having said that, though, when his Honour goes to give his dispositive reasons, his very first reason, at paragraph 168(1), is one and the same as the reason given by the majority.
MR BOAS: Yes. I do not take that, given what his Honour said previously, as saying that is so because of the requirement that one of the two legal obstacles be in play ‑ ‑ ‑
STEWARD J: I understand that, but we seem to be in this sort of nebulous area of something being relevant and perhaps important, and something being a guideline, or a requirement.
MR BOAS: Yes, I accept that, your Honour, it is not entirely clear what is happening here.
STEWARD J: All right.
MR BOAS: What I would say about that is that what his Honour says a little earlier, which is that of course those factors are likely to be in play and are likely to be relevant – and, if I can speak out of school just a little, there is, in my experience with this cases, it is very often the case that one or either of those legal obstacles are present in people seeking to set aside precious deeds.
EDELMAN J: Can you give you give us an example, then? I mean, paragraph 110, which was one of the paragraphs that you took objection to, begins with:
At least in an ordinary case –
Could you give us an example of an ordinary case where there was no finding of any impact by a limitation issue or the Ellis issue, but it would be just and reasonable to set aside a settlement?
MR BOAS: Yes, your Honour. It might be one of, or a combination, rather more likely, of factors as those set out at paragraph 112 that are recounted in the second reading speech. There may be matters that motivated a person to enter into a previous deed that do not necessarily specifically engage one of the two legal obstacles but do engage questions about: perhaps they were not represented; perhaps they were poorly advised; perhaps they were, because of their psychiatric condition relevant to the alleged abuse, unable to confront the prospect of a civil trial and giving evidence. It might be any number of factors that we say, in combination, may lead to the determination in the broad ambit of the power under section 27QE to set aside.
STEWARD J: But do you go so far as to say that the majority were saying that those sorts of considerations would never be sufficient? Do you say the majority goes that far?
MR BOAS: As I said to your Honour Chief Justice Gageler, it is a little difficult to tell exactly what is being said here. I do read it in that way.
STEWARD J: I see.
MR BOAS: I would say, in the alternative to that proposition, that if that is wrong and all the court was doing was identifying factors that should be and would be most likely to be in play, with respect, if guidance is being set, it should be done more clearly so that lower courts can know what and the extent to which those factors are to be relevantly taken into consideration.
That leads, your Honours, to a point raised against us with respect to the question of guidance and the case of Norbis v Norbis that is referred to. I take it from paragraph 7 of our friends’ outline of submissions this morning that they do not characterise any longer this provision as being discretionary in nature – which is say is correct, of course, it is not.
It is appropriate, of course – and it has been noted by this Court on a number of occasions – for appellate courts to set guidance for the determination by lower courts with respect to provisions such as this to best understand how to deal with the broad evaluative power that is created by the reference to “just and reasonable”, but – this is this important bit, of course – there is nothing in that that would permit a court in doing so to set a binding rule.
GAGELER CJ: It is not – as I understand it, you do not have any quibble with the attempt to provide guidance, you say the guidance was wrong.
MR BOAS: That is precisely so, your Honour, yes. That is our position.
EDELMAN J: Even if you succeed on that, you need to succeed on your second ground as well.
MR BOAS: Yes, we do, your Honour.
GAGELER CJ: And I suppose you would say that, however the majority is properly read, when you read Justice Lyons’ reasoning, you can see that the majority can be interpreted as fettering the exercise of judgment in the way he explains.
MR BOAS: Yes, with respect. Precisely, your Honour. That is, we are saying that will be the effect of what the court is saying, either by dint of it being an imposition – a rule, if you like, that is to be followed, and lower courts may perceive it in that way. That is the second mischief, of course, is that even if it is not a binding rule, it is highly likely that lower courts reading the Court of Appeal’s judgment will follow that and impose a requirement of that nature.
Logically, I suppose I am saying that if guidance is being set by the court, and that that is appropriate, that it needs to be set in a clearer way, but, of course one which is consistent with the proper statutory construction of the provision.
Your Honours, there is one other matter in respect of ground 1 that is put against us that I wish to address, and that is the appellate decisions of Victoria and Queensland in the cases of WCB and TRG. If I can take the Court, please, to WCB [2020] 62 VR 234, that is at volume 4 of the joint book of authorities at tab 8. The paragraph that our friends rely on is paragraph 106, which is page 188 of the joint book. The court, having referred to the legislative context, which we have traversed, goes on to say:
In that context, it would be entirely artificial, in construing section 27QE, to ignore the cumulative effect of the two principal barriers that obstructed the rights of victims of childhood sex abuse –
That is not a contentious proposition, we submit, and we accept it, of course. The point, I suppose is this. The court does not go on to say anything about the necessity for those factors to be central to or a leading factor in a claimant entering into a previous settlement agreement. That is the first point.
The second point is that that statement is wedged between two statements of the court that are of some relevance in understanding what the court was doing. At paragraph 104, where the court refers to:
The phrase ‘just and reasonable’ –
being:
of broad ambit.
and the second, over at paragraph 121, page 194 of the joint book ‑ ‑ ‑
GORDON J: What paragraph was that, I am sorry?
MR BOAS: Sorry, your Honour, paragraph 121.
GORDON J: Thank you.
MR BOAS: Where the court says that:
the single question –
that is, whether it is just and reasonable to set aside, in section 27QE:
does not prescribe matters which the Court should have regard to in determining that question.
Now, if the court is here doing rather – I will put this the other way – if the majority in DZY’s Court of Appeal judgment is doing no more than identifying other factors that are relevant, then we have no problem with that. It is the proposition that that might support the argument that there is a requirement that one of those two legal obstacles be present before it can be just and reasonable to set aside. So, we say that WCB really is of no assistance to the respondent in this respect.
With respect to the second case, TRG (2020) 5 QR 440, if I can refer the Court to that case, that is at volume 4, tab 9 of the joint book. The only paragraph that I want to draw the Court’s attention to there is paragraph [28], which sits amongst a triumvirate of paragraphs that seem to be key to that decision, that is on page 226 of the joint book. There, Justice Fraser, who delivered the judgment, Justice Morrison and Justice Mullins concurring, in the second half of paragraph [28] dealing with the equivalent Queensland provision, it is clear that that provision does not identify:
the material factors or the relative weight or significance to be attributed to any of them –
and that that compels the conclusion that such factors and weight will depend on:
judicial assessment of the particular circumstances of each case.
That is a proposition that we agree with.
GORDON J: Can I just ask about that?
MR BOAS: Yes, your Honour.
GORDON J: In relation to paragraph [28], is that, in a sense, what Justice Lyons is saying, or to be taken to be said when he deals with it as a matter of principle, at 166, in terms of it:
will depend upon all the relevant circumstances.
It is sort of a very simplified version of that which you have just taken to, in Justice of Appeals Fraser’s judgment, and then the analysis he adopts himself, at 168. Is that the way you put it?
MR BOAS: Yes, your Honour.
GORDON J: Thank you.
MR BOAS: Thank you. So, our position is that nothing in TRG supports a requirement of the presence of the limitation period – in that case, that was the relevant issue – or, of course, by extrapolation, the Ellis defence as being matters that motivated the claimant to enter into the agreement before it will be just and reasonable to set aside. May it please the Court, if I could move ground 2?
GAGELER CJ: Just completing ground 1, if you are right on ground 1, I think you accept that that is not dispositive.
MR BOAS: Yes, we do accept that, your Honour.
GAGELER CJ: All right, thank you.
MR BOAS: Thank you, your Honour. Indeed, I suppose we would put it in this way: whatever the outcome of ground 1, we say that a proper consideration of all of the evidence leads to a conclusion that it was, indeed – and will be – just and reasonable to set aside the previous settlement agreements in respect of DZY.
We say that is because an appreciation of all of the evidence properly leads to the conclusion that what DZY was preoccupied with – primarily, with respect to the resolution of his claim, including the manner in which the loss of earnings or economic loss issue is dealt with – were the two principal legal issues that are in play as well as the question of having to pay the costs of the respondent if he loses at trial.
I fully understand what is put against us with respect to the delineation between issues concerning economic loss and the remainder of the case. What I say is that that is an unrealistic assessment of the evidence when one considers it in totality and in context, and I propose to make good that proposition by ‑ ‑ ‑
EDELMAN J: We do not have all of the evidence before us. Why, if you are successful on ground 1, would the appropriate course not be to remit the matter back to the Court of Appeal, which has all of the evidence and can consider, on your submission, everything, without putting any undue weight on any particular factor?
MR BOAS: It is certainly an option available. We say it is unnecessary in this case, because all of the relevant evidence that the Court needs to determine the matter is in the books of further materials, and, of course, this being one of those cases where there is no advantage – of course, the Court of Appeal would not have that advantage anyway – but there is no advantage in the sense of witnesses having given evidence and issues of credibility or reliability being in play. So, we would submit that it would be appropriate for this Court to determine that question.
Can I start seeking to make good my proposition by reference to what DZY said in respect of why he settled his claim in 2012. That commences in the appellant’s further book of materials at ‑ ‑ ‑
GAGELER CJ: Let us just understand exactly what we are doing here. You do not challenge any finding of primary fact, as I understand it.
MR BOAS: In what sense, your Honour?
GAGELER CJ: Well, you say that the evaluative judgment that should have been reached is a different one, but you are now taking us to what is said in evidence. Are you asking us to draw, from what is said in evidence, some factual conclusion?
MR BOAS: Yes, your Honour.
GAGELER CJ: Is that factual conclusion reflected in the judgment below?
MR BOAS: The factual conclusion is reflected in the primary judge’s decision. The facts are referred to, but dealt with – of course, concluded differently – by the Court of Appeal.
GAGELER CJ: It is a very spare ground of appeal, to be delving into the detail of the evidence. I can understand a submission based on the facts as accepted by the Court of Appeal to the effect that a different overall evaluative conclusion should be reached, but if we are now going back to the evidence and you are asking us to draw our own conclusions of primary fact from the evidence that was led that are different from the findings in the Court of Appeal, that is problematic, given the ground of the appeal upon which special leave was granted.
MR BOAS: We advance ground 2 on the basis that the Court of Appeal reached an incorrect conclusion on a consideration of the evidence. We do not seek to rely upon evidence – certainly not extensive evidence, and possibly not evidence at all – that is not referred to by the Court of Appeal, and certainly not by the Court of Appeal and the primary judge – the Court of Appeal having considered the same material and having the same material before it.
We would invite the Court to give consideration to that evidence, whether it be by reference to what the Court of Appeal said about it, in the sense that it refers to it, but, of course, we are inviting the Court to come to a different conclusion, based upon the facts that were before it.
EDELMAN J: But if I can take you, for example, to Justice Lyons’ judgment, he applies the approach which you submit should be taken, and then, at 168, applies it by reference to the factual conclusions, including the inferences that are drawn from the evidence. There is nothing in your second ground of appeal that says that there is any particular error that is made there. Is there evidence that he has not referred to or evidence that he has not put sufficient weight upon?
MR BOAS: The position is that the inferences that are drawn from the evidence are incorrect. It is true that ground 2 does not break down sub‑grounds identifying those specific inferences; we accept that.
STEWARD J: So, what do we do, for example, with a paragraph like 145 in the majority’s judgment, when they say:
When DZY had the chance to do so –
that is, to explain:
he did not say that any other factor motivated that decision and there was, as we have said, good reason for him to be apprehensive about a DSS clawback.
How do we go behind that?
MR BOAS: Well, I would invite your Honours to do that by consideration of the content of DZY’s affidavit, which was considered by the Court of Appeal also in paragraph 130, and a conclusion expressed in footnote 104, and by reference to that ‑ ‑ ‑
STEWARD J: So, you just want us to redo the whole process again? It is not what we normally do here.
MR BOAS: No. And I understand that, your Honour.
STEWARD J: Yes.
MR BOAS: It is not necessarily a requirement that your Honours would redo the whole process but, yes, we would say that concluding – or reaching a conclusion on ground 2 in the matter that we contend for would require the Court to have some appreciation of the evidence contained in the books of further materials.
GAGELER CJ: If you had presented this case for special leave on that basis, that you are having us revisit the findings of fact, we may not be here. Do you rely on the findings of fact of the primary judge?
MR BOAS: Yes, your Honour.
GAGELER CJ: Can we start with those, perhaps?
MR BOAS: Yes, your Honour.
GORDON J: One way of approaching it is to say: I accept the findings of the primary judge, these are the critical findings; the Court of Appeal got it wrong, and, therefore, one ends up with an inevitable result.
MR BOAS: Yes.
GORDON J: So, I think you are stuck, at least for present purposes, with the findings of the primary judge.
MR BOAS: Thank you, your Honour – and, I am certainly comfortable to start by and confine myself to reference to paragraphs in the primary judge’s judgment, which we say the Court of Appeal wrongly overturned.
GAGELER CJ: You will have to take us to the paragraphs upon which you rely, and you will have to show us where and why the Court of Appeal was wrong.
MR BOAS: Yes, thank you, your Honour. Really, the critical – perhaps, the critical passage with respect to why we say the Court of Appeal got wrong the question of what was motivating DZY to enter into the agreement, particularly in 2012 – a critical time – is at paragraph 119 of the primary judge’s judgment. That is at core appeal book page 37. That addresses what we say is really a critical issue, which is what was happening at the settlement conference, and the lead‑up to the settlement conference, and the evidence that goes to what motivated him to resolve his claim, including with respect to the Centrelink issue. His Honour refers, at first, to the defendant submitting – to the defendant’s position, there, which has been maintained – which was that the:
instructions to his lawyers not to pursue an economic loss claim were motivated by a desire to shield the plaintiff from –
potential Centrelink payback. His Honour goes on to say that:
While it is reasonably clear that was the content of the advice given to the plaintiff –
at the conference, his Honour says:
that assessment does not take into account that the advice was given, seemingly for the first time, on the day of the settlement conference and during the part of the conference when the plaintiff’s solicitor and barrister reiterated the issues the plaintiff’s case faced because of the limitations and Ellis defence issues.
His Honour goes on to refer to facts that are determined and accepted by the Court of Appeal, but to a more moderate degree, that the plaintiff was:
highly anxious –
on the day and:
due to his heavy drinking, he cannot recall all of his conversation with his lawyers. The plaintiff’s evidence was that he accepted the advice his lawyers gave him on the day of the settlement conference.
And then, two important sentences:
Given this confluence of circumstances it is not possible to isolate the plaintiff’s motivation for instructing his solicitor not to pursue his economic loss case solely to the possibility of a Centrelink repayment. That factor was undoubtedly part of the reason for the plaintiff’s instructions but it is not possible to find, on the totality of the evidence, that it was the sole or dominant motivation, divorced from consideration of the other problems with his case.
The Court of Appeal deals substantively with this, I think, best at paragraph 130 of the judgment. And there it is stated that – at page 79 of the core appeal book:
At no point in his evidence did DZY say, in terms, that he decided not to pursue an economic loss claim because of limitations and Ellis defence issues.
There is a footnote there to the evidence given by DZY in his affidavit, which is:
At paragraph 28 of –
that affidavit. There is a partial reference to a part of the second sentence in that affidavit where:
DZY referred to . . . difficulties suing Church institutions possibly impacting ‘employment on my Centerlink benefits’ –
And the court says that is “muddled”, and that is a reasonable observation, and then goes on to say that it:
made no sense.
What we say about that is that, reading paragraph 119 of the learned primary judge’s judgment, it does make sense. The inference is open because it is open when one appreciates the context in which the conference is occurring and the instructions are given, and in the circumstances in which the state that DZY is in, and that for him – in an ineloquent way, but perhaps the best you can do – is putting together all those issues as being relevant in his mind at that time, which lead him, ultimately.
STEWARD J: Part of the difficulty we have, where we are, is when one looks at some of the reasons given by the Associate Justice for why the Associate Justice found that was just and reasonable, there is reliance upon evidence that goes more generally to the settlement overall, rather than the excision of economic loss. For example, at paragraph 122, there is the evidence that he was:
advised . . . that his case faced significant issues –
that goes to the issue of settlement more generally; paragraph 123:
he felt he had no choice –
that goes to the settlement more generally. The question then becomes: why was economic loss excised from the settlement deed? And on that respect, the evidence before us is that he was advised to that, and the evidence at paragraph 121 of the Associate Justice’s reasons is that there was:
no evidence that the plaintiff was pressured to enter into the Deeds –
MR BOAS: Indeed. No, I accept that, your Honour.
STEWARD J: So, focusing just on the excision of economic loss and the reasons why that took place, what is the evidence that suggests that there was not a good reason to do that?
MR BOAS: So, perhaps if I can address it in this way ‑ ‑ ‑
STEWARD J: Or the findings, more accurately, that it was not – I should have said, not what is the evidence, what are the findings that relate to the excision of economic loss as distinct from the settlement more generally?
MR BOAS: So, the findings at paragraph 119, what they address, in my submission, is an appreciation that this was a person who was not, on his evidence, entering into a delineated settlement process where he appreciated that he was resolving part of the heads of damage – potential heads of damage – of his claim in one way and another head of damage of his claim in another way.
It is true that the solicitors signed certificates, both in 2012 and 2015. It is also true that by reference to paragraph 66 of the learned primary judge’s reasons at page 19 and over of the core appeal book, his Honour there refers to file notes in 2015 to the effect that DZY:
doesn’t seem to understand what happened at the settlement conference.’
STEWARD J: There is a finding at paragraph 147 of the majority’s reasons that the:
reported state of anxiety and comprehension difficulty does not reach the level of him being mentally incapable of understanding advice given –
to him.
MR BOAS: We accept that, and I presume that, what is put against us, that we are raising a new case, is the suggestion that we are claiming there is some sort of legal incapacity. We are not doing that.
STEWARD J: Okay.
MR BOAS: It is simply a matter of the weight of the evidence, considered together and understanding what DZY says about why he settled. Yes, of course it is possible, when one puts a lens on a particular part of the process in the evidentiary matrix, to come to a conclusion – as the Court of Appeal did and is contended for by the respondents here – that the economic loss issue is dealt with in a distinct manner by reference to a concern about a Centrelink repayment, perhaps put more crudely in various parts of the evidence.
GLEESON J: Mr Boas, are you saying that the evidence or the findings of the primary judge support the conclusion that the limitation and Ellis defence has materially influenced the decision not to pursue an economic loss claim?
MR BOAS: Yes, your Honour.
GLEESON J: Are you relying on anything other than paragraph 119 of the primary judge’s reasons?
MR BOAS: Paragraph 119 is the primary paragraph, and of course there is the paragraph which – the maligned paragraph, if I can put it like that – where the double negative is put, paragraph 124.
GAGELER CJ: This is the primary judgment?
MR BOAS: The primary judgment, I am sorry, your Honour, at page 38 of the core appeal book. And the final sentence of that paragraph is, your Honour:
In my view it is not possible to find that the limitations and the Ellis defence issues had no material influence on the plaintiff’s decision not to pursue his economic loss claim.
That was criticised by the Court of Appeal as being a “non‑finding”.
STEWARD J: They characterised it as “speculation”, did they not?
MR BOAS: They did.
STEWARD J: And why do you say it is not?
MR BOAS: It is not speculation, because if an appreciation of the evidence as his Honour unpacked, to a limited extent in paragraph 119, enables – we say, safely – an inference to be drawn that there was a coalition of issues in DZY’s mind that led him to resolve his claim, including ‑ ‑ ‑
EDELMAN J: Really, your submission is that the reason it is put in a double negative is because his state of mind, in relying upon his solicitor’s legal advice and broadly understanding the issues is quite muddled and there is a bunch of factors in the mix, but very difficult to isolate any of them from the other.
MR BOAS: Yes, with respect, that is precisely what we say, your Honour.
GAGELER CJ: So, is paragraph 150 in the Court of Appeal’s judgment just completely wrong, in your submission?
MR BOAS: Yes, we say so. If one reads the entirety of the primary judge’s reasons, including a reference to paragraph 119, his statement at paragraph 124 should, in our submission, be read as, if not a positive finding, positive enough.
GLEESON J: Does your case on ground 2 depend upon a finding of material influence?
MR BOAS: With respect to the two legal obstacles? No, with respect, your Honour, because if we are right about ground 1 and that any number of factors can be in play, of course, the finding that chief among the concerns of DZY in resolving the economic loss component of his claim was a potential for Centrelink clawback, that chiefly leaves open other factors as being potentially relevant to him, including the things that are referred to by the primary judge, the matters that your Honour Justice Edelman put to me earlier. So, no, we say that it does not resolve the question of whether it is just and reasonable to set aside.
GLEESON J: I am not clear what factors you are relying on to say that it was just and reasonable.
MR BOAS: There are, we say, a number of facts that emerge from the judgments. There are the two legal obstacles and their relevance, as we have put it, being also relevant to this.
EDELMAN J: Why is a positive finding relevant at all, if, for example, DZY relies upon legal advice and the lawyers had relied upon the Ellis defence and the limitation period? Does it matter that, given that the lawyers had considered them to be significant obstacles, does it matter whether he understood what they were or comprehended, or even turned his attention to those matters, if he relied upon what the lawyers had advised him?
MR BOAS: That is not a resolved question, your Honour, in the authorities. It seems as though the authorities that have dealt with this provision and its equivalents have proceeded from the basis that is the subjective motive of the claimant in entering into the previous agreement that is relevant. But obviously, a number of the factors – “additional factors”, as it is put – might be subjective or objective in nature, and one might conceive of many others that might be subjective or objective in nature.
TRG was a case where the claimant proceeded on the basis that the objective fact of that obstacle was sufficient, and that was rejected by the primary judge, and the Court of Appeal agreed with that. We do not foreclose the possibility that, with respect to the existence of the legal agreement, there is a slightly different gloss – and I mean that in a positive, and not negative way – based upon what your Honour is putting to me, which is that if his legal representatives appreciate it and are advising him about it, and that it is clearly in their minds, in the provision of that advice and the signing of the certificate, then that may be sufficient.
STEWARD J: But those two factors go to why the settlement was entered into generally. The question is: what is the factor and the finding that explains the excision of economic loss from the settlement?
MR BOAS: The best we can do ‑ ‑ ‑
STEWARD J: Is 119.
MR BOAS: ‑ ‑ ‑ is 119. Can I perhaps extrapolate on what his Honour says there by reference to a matter I put at the very start of my submissions on ground 2, which is that the evidence, of course, is to be taken as a whole, and considered as a whole, and the evidence as it is expressed, even in paragraph 119, suggests safely, we would submit, that DZY was not thinking about economic loss and Centrelink with respect specifically to the matter in which loss of earnings is dealt with in the deeds. He is thinking, as he says and as is recounted, about the two legal obstacles and having to pay the Christian Brothers’ costs. Another objective fact that would be relevant to come back ‑ ‑ ‑
STEWARD J: Just before you go on ‑ ‑ ‑
MR BOAS: I am sorry, your Honour.
STEWARD J: That is all right. So, we return to Justice of Appeal Lyon’s reasons, paragraph 168(1), do you take issue with the statement that there was no direct evidence from DZY about why he did not pursue the economic loss claim?
MR BOAS: I do, by virtue of paragraphs 33 to 35 of his affidavit where he says why he entered into the settlement in 2012, and also by reference to paragraph 28, which is illuminated by footnote 104 of the Court of Appeal’s judgment, where he puts a number of issues altogether in one. That is the best, in my submission – even though it is a very ineloquent phrase, it is the best evidence of what is going on in DZY’s head as motivating him to resolve his claim.
He is not delineating between heads of damage. He sees this as a resolution of his claim as such claimants inevitably do, and can I just – I had forgotten before to refer to another piece of evidence, and I will find the appropriate paragraph of the judgment where it appears.
GORDON J: This in in the primary judgment?
MR BOAS: Yes, it is at paragraph 66 of the primary judgment, your Honour. I think I might have actually referred to it – which is that he expresses to his lawyers a few years later – obviously, what he says to his lawyers ends in a file note saying that he does not seem to understand what was happening at the conference. The other file note that is referred to by his Honour in that paragraph but is not quoted by his Honour says DZY did not understand the effect of the deed. That appears in the book of further materials at ‑ ‑ ‑
GAGELER CJ: You are wanting us to look at a file note now?
MR BOAS: Well, I do not – your Honours do not need ‑ ‑ ‑
GAGELER CJ: There is a finding about this somewhere, is there not?
MR BOAS: There is a finding about it in paragraph 66. It is referred to, yes.
GAGELER CJ: But, also in the Court of Appeal, there is ‑ ‑ ‑
MR BOAS: Yes, your Honour. That is, with respect, further evidence and supportive of the learned primary judge’s conclusion in paragraph 119 about what was happening with respect to the resolution of the economic loss part of his claim.
GAGELER CJ: So, boiling this down, if paragraph 119 is accepted, you say you win. Is that right?
MR BOAS: Yes, we do. We also say in reference to I think Justice Gleeson’s question about what other factors might be relevant ‑ ‑ ‑
GLEESON J: Well, even why 119 is relevant would be – I think is not entirely clear.
MR BOAS: Why it is relevant?
GLEESON J: Why you win if 119 is accepted. It is not clear to me.
MR BOAS: If 119 is accepted and the conclusion at 124 of the learned primary judge’s ruling is accepted as being if not positive, positive enough, of a finding, then the motivating – part of what motivated DZY to enter into the agreement with respect to the economic loss claim is influenced by the two legal obstacles. So, that is why we say we win by that path. But I was also addressing the collateral point, which is: do those factors have to be in play in DZY’s mind when he entered into settlement? And the answer to that might be no.
GAGELER CJ: Well, it is really important that we understand exactly how you are putting your case on ground 2.
MR BOAS: Yes.
GAGELER CJ: I understand, based on paragraph 119. What else, if any, is there? Is that it?
MR BOAS: What other factors may be relevant, your Honour?
GAGELER CJ: Yes – no, no, that you say are not just relevant but compel the conclusion which you would have us come to.
GORDON J: Another way of asking that question is what was put, and do you now put, to the primary judge as the factors relevant to the setting aside of the economic loss settlement.
MR BOAS: Yes, thank you, your Honour. The two legal obstacles, clearly; the concern about paying the respondent’s costs; the fact that, as an objective fact, the settlement sum is far lower than he would expect to receive if he successfully ran a single claim, particularly on the economic loss issue by reference to special damages that are in the materials; as conceded below and noted in the judgments, there being no prejudice to the defendant, apart from the obvious prejudice of losing the protection of the deed; and, perhaps, the proposition that entering into or resolving the loss of earnings component of his claim, by reference to the Centrelink repayment issue, it is not agitated in the – specifically, although it is certainly relevant and referred – is not inherently, necessarily, positive or negative in the conclusion as to whether it was just and reasonable. That will probably depend upon the constellation of factors that are relevant to the entry into the agreement at the relevant time.
GORDON J: If you take that list, some of them are objective and only some of them are subjective. You said earlier in relation to TRG that the objectivity had, in a sense – factors had been put to one side, which I do not think is the way TRG put it. So, there is, as you say at the end, a constellation of objective and subjective factors that go into the mix in identifying whether or not it meets the statutory test.
MR BOAS: Yes, your Honour. Your Honours, not to transgress further on ground 2 there, unless there are other matters?
GAGELER CJ: Thank you.
MR BOAS: May the Court please.
GAGELER CJ: Mr Hay.
MR HAY: If the Court pleases. I will address ground 1 first, because I think it is quite short. I do not think there is a lot of distance between the parties’ positions. The first question is: how do you characterise what the majority did? We do not contend that it would be a proper thing for the majority to condition the discretion by the imposition of some inflexible rule – or a gateway – that says, you can only satisfy this provision if Ellis, or limitations, were in play.
We read the majority as saying that, in the ordinary case – it seems pretty uncontroversial, but, in the ordinary case, one of those two factors will be a predominate factor. They use the word “central”. They refer to other reasons as supporting reasons. That seems to us, with respect, to be an observation about the nature of these sorts of cases in the bulk of cases that one would likely come across. If you took long enough, you might be able to come up with a set of scenarios that sits outside of that but doing that, itself, would not make it an ordinary case.
So, as we put it, the majority was doing no more than giving guidance – not setting rules, but giving guidance to lower courts to say, when these sorts of matters come up, look to these particular factors. We have to concede that Justice Lyons read the majority as doing more than that. We do not accept that that is what they did but, if that is so, we would agree, with respect, with Justice Lyons that the majority perhaps went a little far in the way in which they expressed things, particularly in the relevant factors at 110 to about 113.
If that is accepted, then what does this Court do about it? Could I just make one other point, your Honours. We did unfortunately creep into the use of the word “discretion” in our written submissions. We have reflected on that, and we think the more accurate way to put it would be to say that the power in play is one that requires the Court to form an evaluative judgment which permits of only one legally correct answer once – adopting the reasoning from GLJ. It does mean, though, that it does not prevent the Court giving guidance as to how lower courts might perform that evaluative function. So, where we have said “discretion”, that should be read as a reference to an evaluative judgment.
If that is correct, then what we say for the purposes of this appeal should occur if this Court believes that the majority has in substance or may arguably have gone too far, is to wind that back very slightly and say that those factors are typically in play and ordinarily relevant, but they do not cover the field for all applications of this type. So, I think – I was going to say a bit more than that but, given the way in which it has come out, I do not think the parties are terribly far apart in respect of ground 1
STEWARD J: Well, the ground of appeal is that the error was that you cannot win unless you establish that the limitation defence or Ellis defence had a material impact or was a leading factor.
MR HAY: Yes.
STEWARD J: That is the ground.
MR HAY: Yes.
STEWARD J: So, that is saying that the Court of Appeal had those issues as a necessary precondition to enlivening of the power.
MR HAY: That is right.
STEWARD J: And your case is, I assume, that the Court of Appeal just did not say that.
MR HAY: That is right, your Honour.
STEWARD J: Yes, I understand.
MR HAY: It is a matter of construing those relevant paragraphs, and we would accept that on one reading it could be put that high, and certainly Justice Lyons did, so we cannot avoid that.
STEWARD J: I see.
MR HAY: If, of course – and this falls from something that the Chief Justice raised with my friend – that is not dispositive, we say that the test or the evaluative function was performed correctly in substance, both by the majority and particularly by Justice Lyons, who sets out why in this particular case the result was a successful appeal, which resulted in a partial set aside and not a complete set aside. We note that Victoria, we think, is the only jurisdiction which has a textually explicit power ‑ ‑ ‑
GORDON J: To set aside in part.
MR HAY: That is right, your Honour. We expect that probably would not prevent a court in another jurisdiction inferring that it had power to do it in part, but in Victoria it is explicit. That was dealt with at length in Pearce v Missionaries of the Sacred Heart [2022] VSC 697 – that is the Pearce decision that is referred to in the judgment of the Court of Appeal.
The critical matter is the one we would say, with respect, that Justice Steward identified, and it is not so much the entry into this settlement at all – we have conceded from the commencement of this application before the Associate Justice that it was just to set it aside in part, but it was not just to set it aside in total because a decision extrinsic to matters arising from the vice to which these provisions were directed motivated the decision to remove economic loss from the claim.
In that respect, our friends have done their best to say why – to sort of strip down a little bit, because it was all muddled in together – the Ellis defence, the limitation issue and the “clawback” issue, as it was referred to below – because all of that was in the mix, drawing on 119 of the judgment, then it is just and reasonable to set aside the whole of the agreement.
We say a couple of things about that. First is we did not read the grant of special leave, being ground 2, to be as broad as our friends have put it. We read it as being, if the majority went too far in applying those facts on the correctness standard, then arguably the result would be different – but no broad attack on the factual findings with no sub‑grounds to give us any notice of precisely the way in which they say the Court of Appeal erroneously came to the factual conclusions that they did. Putting that aside, we say the ‑ ‑ ‑
GORDON J: But you address some of that in your submission.
MR HAY: We do.
GORDON J: You are on notice, at least to that extent.
MR HAY: To that extent we are, your Honour. We should say, in that connection on the comprehension point, we read it as them taking the point about comprehension on the day of the informal settlement conference, but not thereafter. Your Honours will recall that the chronology in this case was that there was an informal settlement conference in 2012. There was about six weeks between that point and when the 2012 deed was executed. Between that time there was contact between the solicitors, and it was in that time that the excision of the economic loss claim was perfected and then the deed was signed.
Obviously enough, we have made forensic choices, including not to cross‑examine DZY about his state of mind in that particular period. Our friends should not be allowed to change the way in which they put the case, particularly in this Court under that ground. In any event, can I just say a couple of things about why the Court of Appeal clearly go that point right. My friend has identified, I think in answer to a question from her Honour Justice Gordon, a number of factors, both subjective and objective, going to why he says the whole of the deed should be set aside.
The problem that we say in all of that is it does not specifically address why – let us take Ellis, for example. Why is DZY in any better position by removing economic loss compared to any other factor? What I mean by that is, if our friend says, well, they removed economic loss because of the Ellis concern, we ask the question rhetorically: why? How does that advance his case? On this analysis, it makes a weak case even weaker by saying, my damages are even less. It does not grapple with the clear, contemporaneous evidence of what motivated that decision, which, on any fair reading of the evidence, was to do with the risk of clawback as a result of the Centrelink issue.
EDELMAN J: Why would the clawback risk relate only to economic loss rather than general damages?
MR HAY: As I understand it, your Honour, because, if some portion of damages was referrable to economic loss, then clawback would be in place, and if the damages were not – for example, general damages – then you would not be exposed to that risk because of the terms of the social security legislation. What our friends, we say with respect, do not properly grapple with is, first of all, that contemporaneous evidence – the fact that he had advice during the whole time, the fact there were certifications from his solicitor saying that he understood all of what was being done, and none of those things are gainsaid, we would respectfully submit, by paragraph 119.
GAGELER CJ: So, is 119 wrong?
MR HAY: We say 119 is muddled, your Honour, in that it does amount to a non‑finding, it does amount to speculation, and – just to be clear, this is the not possible to isolate the plaintiff’s motivation not to pursue the economic loss, that is the double negative. The Court of Appeal, we say, correctly dealt with that by saying it is either speculation or it is a finding – if it be a finding – without an evidential underpinning. It is critical to recall ‑ ‑ ‑
GORDON J: Well, it is not about an evidential underpinning. You would say it is contrary to the evidence, the contemporary evidence. The matters
you have just given us are: there is clear contemporary evidence and there is the certification.
MR HAY: Going the other way, your Honour. That is right. It is critical, we say, that – and they note this in the judgment – DZY never said expressly and in terms that that is why I did it. The highest it gets is the – I think it is 104 footnote in the Court of Appeal judgment to which our learned friend has taken you. So, what our friends have not done, with say with respect, is identified an error in the fact‑finding approach that the Court of Appeal has adopted.
Unless there are any other questions, your Honours, we thought that would cover off both grounds 1 and 2.
GAGELER CJ: Only about costs.
MR HAY: Yes. In respect of costs, your Honour, something odd happened in – well, not odd, I withdraw that – but what happened when the Court of Appeal handed down its judgment is those representing DZY contended that the matter was of sufficient public interest that, notwithstanding that they had lost at that time, no costs should be awarded. That was the approach that the court had adopted at that time. We say if that applied at that time, it applies at this time.
So, in those circumstances – if, for example, this Court holds that the majority did overstate and needs to wind back the vehemence of the way in which they have put the statutory test, then that same result should flow, and no order should be made for costs. But we say what we said about ground 2, that that should not result in the agreements being set aside in their entirety.
GAGELER CJ: Thank you.
MR HAY: If your Honour pleases.
GAGELER CJ: Mr Boas.
MR BOAS: Thank you, your Honour. Briefly, in reply, your Honour Justice Edelman asked a question about why the clawback issue would not go to other matters in the settlement or in the amount awarded, perhaps. The answer that was given by my friend was because of the operation of the Social Security Act.
We agree that the Social Security Act does, indeed, operate in such a way as to set – and this was dealt with – it has not come up in this proceeding, but it was dealt with in the case of WQA (a pseudonym) v Comensoli. If I can give, perhaps, just the references to the primary judgment in the Court of Appeal judgment – primary judgment [2023] VSC 657, Justice Gorton, and on appeal it was Comensoli v WQA (a pseudonym), medium neutral (2024) VSCA 104 – their Honours Justices Beach, Kennedy and Walker of the Court of Appeal.
That was a culmination of issues that had been bubbling along for some time about what happens with a potential clawback by the secretary of the department in circumstances where an internal calculation of the preclusion period leads to the conclusion that some of the economic loss component, if there is one, of a settlement or award can be clawed back by social security.
At the time that DZY was entering into his agreement in 2012 – and again can I test the Court’s patience by reference to a comment in a file note by Dr Waller when DZY raised his concerns about the economic loss clause in 2016. She says to him, we want to protect you from Medicare and Centrelink; this is just – do not worry, this is a standard clause. There is obviously no evidence, really, about those issues or the extent to which claimants were acting in that way.
But what we say the relevance of that is this, and it is a point that I raised with respect to the factors when I was asked about the sort of factors that might motivate a determination of the just and reasonable test, which is whether the fact of entering into or resolving the loss of earnings issue in the way that he did is a positive or negative factor.
It is in a sense, and WQA seems to illuminate that, at least prior to that judgment, something of a legal barrier in the sense that claimants and lawyers assumed that there would be a clawback in certain circumstances. So, I really do not raise it to advance the matter any further than that, and really just to answer the question that Justice Edelman raised with my learned friend.
The only other matter that I wish to address in reply – and I do not think I addressed it specifically – is that, of course, paragraph 130 of the Court of Appeal judgment refers to DZY not stating in terms that he had resolved his economic loss claim because of one of the two legal obstacles. It is perhaps worth some consideration as to what it would mean to express that proposition in terms. What it would mean is an explicit delineation by DZY in his mind of the reasons why he was entering into settlement at the time, dealing separately with different heads of damage, in a way that we contend, for the reasons expressed in the primary submissions, is unrealistic.
May it please the Court.
GAGELER CJ: Thank you, Mr Boas. The Court will consider its decision in this matter and will adjourn until 10.00 am tomorrow.
AT 11.10 AM THE MATTER WAS ADJOURNED
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